The coalition government is drawing up new lending targets for the bailed-out banks, Royal Bank of Scotland and Lloyds Banking group. Photograph: Peter Byrne/PA

New lending targets for the bailed-out banks are being drawn up by the government amid mounting concerns that the growth of small and medium-sized businesses is being stifled by the lack of credit from the banking industry.

With a green paper on business finance promised before the summer recess, George Osborne and Vince Cable will now begin hammering out the lending they want to be achieved by Royal Bank of Scotland and Lloyds Banking Group this year.

After the chancellor failed to publish new lending targets his budget last week, there was speculation that the government was reconsidering the promise in its coalition agreement to restore the net lending targets – which take account of loans repaid as well as new ones granted – that were abandoned by Alistair Darling.

Labour secured legally binding agreements from RBS and Lloyds based on gross lending – just the new loans taken out by businesses – after previous targets based on net lending were missed by both banks because the size of loans repaid by customers was greater than new ones taken out. Those commitments would need to be overturned by the new government.A source close to Cable said that a number of ideas were being considered. "Net lending is not the only answer and they are knocking around a number of things."

Treasury sources would not disclose when the lending targets would be published as work begins on the green paper which is intending to look at "the broad range of finance options for businesses of different sizes including bank lending, equity and corporate debt".

"It will invite views from business, investors and lenders on priorities and approaches to enhancing the access of creditworthy business to appropriate sources of finance," the Treasury said.

The City had convinced Treasury officials in the spring that gross targets were more realistic because of the continued low demand for new loans. However, small businesses have been telling Cable that this is not the case and they are being forced to find other ways to obtain credit because of the reluctance of banks to lend.

Stephen Alambritis of the Federation of Small Businesses has told Cable and his minister Mark Prisk that they should set net lending targets as well as specific goals for regions and type of business.

The banks published six commitments to lend to small businesses alongside last week's budget. The British Bankers Association said: "The high street banks are lending a total of £720bn to all UK businesses. A further £100bn is already committed to businesses."

• This article was amended on 28 June 2010. The original sub-heading referred to Charles Osborne. This has been corrected.